Lockstep 2.0: time to upgrade a trusty model
There seems to be something of a queue forming of firms looking to move away from a rigid lockstep partnership. This trend has been underway for years at mid-tier practices, but it goes further than that. Allen & Overy morphed into a managed lockstep years ago, while Clifford Chance deploys a salaried rank that it uses heavily for flexibility and a super-point pool that it doesn't. Now it seems that Linklaters and Freshfields Bruckhaus Deringer – long standard-bearers of lockstep partnership – are exploring means to usher in more flexibility. It's surely a sensible development. The modern concept of lockstep is a curiously dogmatic thing, in many ways unsuited to the demands of the global law firm. For one, the gap between bottom and top earners is far too narrow to accommodate varying global markets. Lockstep is also out of, well, step with demographic changes, increasing the pressure for older partners to retire due to the punishing workloads that come with plateau earnings. Also problematic is its relationship with profits per equity partner (PEP). Combined slavishly, lockstep and PEP can lead firms to bend their business painfully to achieve arbitrary targets.
August 03, 2011 at 07:03 PM
3 minute read
There seems to be something of a queue forming of firms looking to move away from a rigid lockstep partnership. This trend has been underway for years at mid-tier practices, but it goes further than that.
Allen & Overy morphed into a managed lockstep years ago, while Clifford Chance deploys a salaried rank that it uses heavily for flexibility and a super-point pool that it doesn't. Now it seems that Linklaters and Freshfields Bruckhaus Deringer – long standard-bearers of lockstep partnership – are exploring means to usher in more flexibility.
It's surely a sensible development. The modern concept of lockstep is a curiously dogmatic thing, in many ways unsuited to the demands of the global law firm. For one, the gap between bottom and top earners is far too narrow to accommodate varying global markets.
Lockstep is also out of, well, step with demographic changes, increasing the pressure for older partners to retire due to the punishing workloads that come with plateau earnings. Also problematic is its relationship with profits per equity partner (PEP). Combined slavishly, lockstep and PEP can lead firms to bend their business painfully to achieve arbitrary targets.
But surely the oddest thing about the traditional lockstep is that it retains many of its awkward drawbacks even though moderate changes would deal with such issues and still keep its manifest strengths. And let's consider those strengths: lockstep imposes coherence and form on a business, often proving far better at achieving a focus on core areas than mind-numbing 'strategic' reviews.
The straitjacket of lockstep also keeps law firms rigorously mindful of the quality of partners they make up in the first place – an overlooked benefit. The alignment of incentives and collegiality is also a real strength; it's been a counter-intuitive trend in the legal market that the once unchallenged mania for creating masses of salaried partners has faded in recent years as firms have discovered the drawbacks of that tactic.
As it happens, one of the main reasons usually given to ditch strict lockstep – the need to reward and retain high performers – is one of the weaker arguments for its abolition. Successful law firms run as businesses, not for a small group of partners who have disproportionate influence. That said, the competitive reality facing many City firms is that the limits of lockstep-derived models are leaving them too exposed to predatory recruitment from US law firms.
The ideal move would be to keep the strengths of lockstep but update the model for the age of international law. With a blank canvas, you would use a 1:4 run from entry to plateau with two discretionary gateways with clearly defined country and performance factors. You would also likely include a taper or discretionary mechanism to accommodate older partners. The ability to move partners down the lockstep would be fairly limited, however – excessive use of that tactic throws the baby out with the bath water.
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